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On Time Preference

Time preference is a concept used to describe how much or little is a person willing to postpone a gratifying outcome in exchange for an improved outcome.

If the time preference is “high”, it means a person is willing to trade more future benefit in exchange for immediate results. A common example is: “would you rather have 10 dollars now or 100 in a year?” People with a high enough time will have choose the smaller amount of money now, while people with a low enough time preference will choose the higher amount of money later.

In other words, a higher time preference means a lower capacity for delayed gratification. The amount and variety of situations where having a low enough time preference leads to improved results is overwhelming; from optimized spending of money to optimized allocation of time for diverse tasks, including following through with plans which require a lot of time working before the reward arrives.

Knowing about this – being able to name this phenomenon and think about it, allows us to identify it and plan for it. If you lead a team where some members have higher time preference, you may want to look at a way to introduce intermittent rewards which are not too far away from each other. This is, I believe, what “gamification” is all about.

If lower time preference teammates are present, make sure they understand the big picture, the end result of work. As this is usually easier to do than gamifying processes, lower time preference team members can be easier to work with. Unless, for some unfathomable reason, you can’t share the end goal. Then do gamify, because for all that people can delay gratification, if there’s no light at the end of the tunnel, having some small gratifying moments mixed into daily work can work as a motivator.

I have found that my time preference is too high for my taste, and that this is one of the reasons I have felt the need to build upon my discipline. In hindsight, I may have been able to notice this sooner if I’d had the right information – the signs were everywhere – which is why I’m writing on the topic out here.

I’ll try to set up some experiments, with two goals:

To deal with my too-high time preference (gamifying stuff, most likely)

To lower my time preference

I’ve not seen any papers on these kinds of experiments, but I sorely need to do this, so I’ll look it up. I specially don’t have a clue on what to do to lower my time preference, so I’ll need to think about the what and the why, to try and get a clue about the how. Any ideas, don’t hesitate to hit me up.